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This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh.
Abstract
Purpose
This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh.
Design/methodology/approach
The data was obtained through 152 survey questionnaires from a total of 43 privately owned and six state-owned commercial banks in Bangladesh. The analysis was conducted using structural equation modeling.
Findings
The findings demonstrate that the independence of internal auditors and the quality of IA substantially impact enhancing the efficiency of IA. On the other hand, the competence of internal auditors and management support in IA functions do not significantly impact the effectiveness of IA.
Practical implications
The study’s findings may have significant policy implications for the government, regulators, internal auditors, management committees and other stakeholders in establishing programmes to enhance the efficacy of IA as a component of banking audit management reforms.
Originality/value
This study makes three distinct contributions to the existing literature. Firstly, previous literature focused on the determinants affecting the external audit efficiency of the public companies and banking sectors in Bangladesh (Hasan, 2018; M. M. U. Reza, 2021). In this study, the author enhances the research by presenting empirical findings on the IA effectiveness of banks. Secondly, the author expands the research by incorporating both private and state-owned commercial banks as samples. Thirdly, the study is unique given that it investigates the effectiveness of IA in response to the recent financial scandals in the banking industry of Bangladesh (The Daily Star, 2023).
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Hamada Elsaid Elmaasrawy and Omar Ikbal Tawfik
This paper aims to examine the impact of the assurance and advisory role of internal audit (ADRIA) on organisational, human and technical proactive measures to enhance…
Abstract
Purpose
This paper aims to examine the impact of the assurance and advisory role of internal audit (ADRIA) on organisational, human and technical proactive measures to enhance cybersecurity (CS).
Design/methodology/approach
The questionnaire was used to collect data for 97 internal auditors (IAu) from the Gulf Cooperation Council countries. The authors used partial least squares (PLS) to test the hypotheses.
Findings
The results show a positive effect of the ADRIA on each of the organisational proactive measures, human proactive measures and technical proactive measures to enhance CS. The study also found a positive effect of the confirmatory role of IA on both human proactive measures and technical proactive measures to enhance CS. No effect of the confirmatory role of IA on the organisational proactive measures is found.
Research limitations/implications
This study focused on only three proactive measures to enhance CS, and this study was limited to the opinions of IAu. In addition, the study was limited to using regression analysis according to the PLS method.
Practical implications
The results of this study show that managers need to consider the influential role of IA as a value-adding activity in reducing CS risks and activating proactive measures. Also, IAu must expand its capabilities, skills and knowledge in CS auditing to provide a bold view of cyber threats. At the same time, the institutions responsible for preparing IA standards should develop standards and guidelines that help IAu to play assurance and advisory roles.
Originality/value
To the best of the authors’ knowledge, this is the first study of its kind that deals with the impact of the assurance and ADRIA on proactive measures to enhance CS. In addition, the study determines the nature of the advisory role and the assurance role of IA to strengthen CS.
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Guilherme Fowler A. Monteiro and Rinaldo Artes
This paper examines the relationship between entrepreneurs' internality of causal attributions and firm growth during an economic crisis. We propose a U-shaped relationship…
Abstract
Purpose
This paper examines the relationship between entrepreneurs' internality of causal attributions and firm growth during an economic crisis. We propose a U-shaped relationship between the two variables, arguing that the highest-growth entrepreneurs are those with either the highest or lowest levels of internal attribution (IA) during such periods.
Design/methodology/approach
To test our hypothesis, we analyze a database of 804 interviews with entrepreneurs in Brazil during a period of economic stress. Due to the existence of endogeneity, we estimate a model of simultaneous equations in two stages.
Findings
We find evidence of a U-shaped relationship. This means that during economic stress, the fastest-growing entrepreneurs are those who rely more on their own effort (high IA) and those who attribute their success to the economic crisis (low IA).
Practical implications
Tailoring interventions based on attribution patterns and recognizing the U-shaped relationship ensures effective support during economic stress. Entrepreneurial support programs should align with internality levels, emphasizing external awareness or skill development accordingly. Policymakers should take attributions into account when promoting financial resilience. Entrepreneurs would benefit from awareness programs on attributions for reflective decision-making. Ecosystems should foster collaboration by recognizing diverse attributions, enhancing a collective understanding of entrepreneurial responses in crises.
Originality/value
Our results have important implications for understanding the role of entrepreneurs in economic crises. Our results are relevant because they challenge the usual claim that entrepreneurs with high IA are the ones who perform better in situations where external economic conditions are adverse.
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Hamideh Asnaashari and Fatemeh Khodabandehlou
In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of…
Abstract
Purpose
In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of applying Lean Six Sigma (LSS) techniques on the effectiveness and efficiency of IA.
Design/methodology/approach
The study used a quantitative approach, surveying Iranian internal auditors with a sample size of 384 participants. Data analysis involved confirmatory factor analysis and structural equation modeling.
Findings
The analyses demonstrate a significant association between LSS application and IA effectiveness and efficiency. In addition, an exploratory analysis indicates that the application of LSS techniques by less experienced internal auditors had a reverse effect on IA function quality as a component of IA competency. However, IA motivation factors, including education and position, did not mediate the impact of LSS on IA effectiveness and efficiency.
Research limitations/implications
This study was conducted with Iranian internal auditors, which may limit the generalizability of the findings to other countries. However, the primary academic implication of this research lies in its novel perspective on emphasizing the concept of continuous improvement in IA through the use of LSS techniques. By focusing on the need for internal auditors to add value to the business in new ways, this research contributes to the literature on IA quality.
Practical implications
This study has significant implications for the effective management of IA departments. By promoting the application of LSS techniques in IA, lean auditing is enhanced, and IA can create value by improving the quality of its functions. Moreover, IA regulators can benefit from this study as it emphasizes providing guidance and training on LSS techniques to enhance IA skills.
Originality/value
This research is pioneering in applying LSS methodology to enhance the effectiveness and efficiency of internal auditing. It also considers the integration of lean thinking into current audit practices, making it unique and valuable in internal auditing research.
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Tania Nery-Kjerfve and Daiane Polesello
Extant expatriate literature largely adopts a global north/western focus and expatriate-centric approach in investigating spousal/partners’ motives for supporting expatriation…
Abstract
Purpose
Extant expatriate literature largely adopts a global north/western focus and expatriate-centric approach in investigating spousal/partners’ motives for supporting expatriation. Contrastingly, this study focuses on the lived experiences of dual-career female partners from an emerging global south economy and a patriarchal society as it relates to motives for supporting a partner’s international assignment (IA) to a developed country.
Design/methodology/approach
This investigation adopts a hermeneutic interpretive phenomenology research design. Twelve career-oriented female partners from an emerging global south economy (Brazil) who supported a partner’s IA to a developed country (USA) participated in this study. The data included semi-structured interviews and field notes.
Findings
The study indicates that societal constraints, gendered career experiences and career and life stage reasons influenced women’s decision to engage in career opt out and/or interruption in support of their partners' IA. Further, patriarchal long-lasting structures and ideologies shaped women’s career experiences; women perceived IAs as a means of acquiring embodied and institutionalized cosmopolitan capital for themselves and their families in order to gain a better position in a transnational/globalized world.
Research limitations/implications
Although the sample size of this study is appropriate for the methodological choice adopted, future studies should include more participants and address different socioeconomic, political and cultural contexts.
Originality/value
This study highlights dual-career female partners' lived experiences in an emerging global south economy and a patriarchal society as it relates to motives for supporting IAs.
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Ing Grace Phang and Yuting Zylvia Kong
Adopting the unified theory of the acceptance and use of technology 2 (UTAUT2) and the theory of substitutability, this study examines both the technical and sensory factors…
Abstract
Purpose
Adopting the unified theory of the acceptance and use of technology 2 (UTAUT2) and the theory of substitutability, this study examines both the technical and sensory factors influencing Malaysians' intention to adopt virtual tours (IA) and subsequent intention to visit an actual heritage site (IV) in the heritage traveling decision-making process.
Design/methodology/approach
This study collected a total of 278 valid survey responses via purposive sampling. The data were analyzed using SPSS26 and SmartPLS4 software.
Findings
The findings support the significant positive effect of IA on IV, which supplements evidence to subdue misapprehensions that virtual tours (VTs) are competitors or substitutes for in-person visitations. Perceived substitutability was found to have an indirect impact on IV through IA, further proving the mediating role of IA in influencing IV. Technical and sensory factors, namely performance expectancy, hedonic motivation, habit and perceived substitutability of IA, were shown to be critical in influencing IA; however, effort expectancy, social influence and facilitating conditions were not.
Practical implications
This study offers sustainable and practical implications to the tourism industry as well as potential visitors, who can utilize VTs to determine whether targeted tourism destinations are worthy of investing their resources. The findings suggest that the virtual tour experience contributes to tourists' IV by successfully piquing tourists' interest to physically visit heritage sites in the future. The virtual tour could be utilized to generate demand in times of temporary replacement or closure. Destination marketing organizations and destination management companies should consider the technical and sensory aspects of VTs, specifically prioritizing the hedonic motivation factor.
Originality/value
This study integrates the UTAUT2 and theory of substitutability to shed light on the adoption of technological alternatives in the heritage tourism context. Importantly, this study serves as the pioneer effort in examining the interplay of perceived substitutability in the relationship between IA and IV.
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Hany Elbardan, Donald Nordberg and Vikash Kumar Sinha
This study aims to examine how the legitimacy of internal auditing is reconstructed during enterprise resource planning (ERP)-driven technological change.
Abstract
Purpose
This study aims to examine how the legitimacy of internal auditing is reconstructed during enterprise resource planning (ERP)-driven technological change.
Design/methodology/approach
The study is based on the comparative analysis of internal auditing and its transformation due to ERP implementations at two case firms operating in the food sector in Egypt – one a major Egyptian multinational corporation (MNC) and the other a major domestic company (DC).
Findings
Internal auditors (IAs) at MNC saw ERP implementation as an opportunity to reconstruct the legitimacy of internal auditing work by engaging and partnering with actors involved with the ERP change. In doing so, the IAs acquired system certifications and provided line functions and external auditors with data-driven business insights. The “practical coping mechanism” adopted by the IAs led to the acceptance (and legitimacy) of their work. In contrast, IAs at DC adopted a purposeful strategy of disengaging, blaming and rejecting since they were skeptical of the top management team's (TMT's) sincerity. The “disinterestedness” led to the loss of legitimacy in the eyes of the stakeholders.
Originality/value
The article offers two contributions. First, it extends the literature by highlighting a spectrum of behavior displayed by IAs (coping with impending issues vs strategic purposefulness) during ERP-driven technological change. Second, the article contributes to the literature on legitimacy by highlighting four intertwined micro-processes – participating, socializing, learning and role-forging – that contribute to reconstructing the legitimacy of internal auditing.
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Peng Xiao, Haiyan Zhang, Shimin Yin and Zhe Xia
This study aims to explore the role of international ambidexterity (IA) in improving the innovation capability of emerging market multinationals. In particular, the main purpose…
Abstract
Purpose
This study aims to explore the role of international ambidexterity (IA) in improving the innovation capability of emerging market multinationals. In particular, the main purpose of this research is to study the relationship amongst digitalisation, IA and innovation performance (IP) amongst multinational enterprises in China’s healthcare industry.
Design/methodology/approach
The data for this investigation were collected from 134 listed companies in China’s healthcare industry during the study period. This study tested the hypotheses by constructing a two-way fixed-effects model.
Findings
The results show that both the balance dimension and the combined dimension of IA have significant positive effects on IP. Digitalisation not only has a direct positive effect on IP but also positively moderates the positive correlation between IA and IP.
Originality/value
Previous studies have not captured the relationship between ambidexterity, digitalisation and IP, and this study helps to fill in the gap and examine these associations in China’s healthcare industry. The results of this study provide valuable insights for healthcare industry managers to understand the role of ambidexterity and digitalisation in innovation in the context of internationalisation.
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Aitzaz Ahsan Alias Sarang, Asad Ali Rind, Mamdouh Abdulaziz Saleh Al-Faryan and Asif Saeed
This study aims to examine whether information asymmetry (IA) mediates the relationship between women directors and the cost of equity (COE). Specifically, this study posits that…
Abstract
Purpose
This study aims to examine whether information asymmetry (IA) mediates the relationship between women directors and the cost of equity (COE). Specifically, this study posits that women directors tend to lower the COE through the channel of IA.
Design/methodology/approach
This study uses the US-listed firms’ data from 2002 to 2014, comprising 11,189 firm-year observations. This study measures the COE by aggregating the four unique market-based COE models and apply pooled ordinary least square to estimate our results.
Findings
This study documents that women directors are linked to IA, and that IA is linked to the COE. Furthermore, in the mediation test, IA fully mediates the relationship between women directors and the COE. This study's results also validate the critical mass hypothesis, as the IA shows full mediation between the critical mass of women directors and COE. This study also discusses the limitations and major implications of the results along with possible future directions.
Social implications
This study also supports the positive role of females in improvising the economic performance of the firms and supporting the sustainable development goals-5 (gender equality).
Originality/value
The originality of this study lies in its theoretical as well as empirical contributions. First, this study follows the line of inquiry of the mediation analysis, thereby contributing by examining whether the relationship between women directors and financial value, i.e. COE, is indirect. Second, in addition to ex post measures of the COE, this study used four ex ante unique market-based models to measure the COE. Most of the prior studies just rely on book-based measures or use a single market-based mode. Third, the findings contribute insights into how women directors add value and benefits firms.
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Lawrence Haar, Ali Elharidy and Andros Gregoriou
International Accounting Standards Rule 37 (IAS 37) for Contingent Liabilities and Assets were designed to make analysis of exposures facing a corporate entity easier to…
Abstract
Purpose
International Accounting Standards Rule 37 (IAS 37) for Contingent Liabilities and Assets were designed to make analysis of exposures facing a corporate entity easier to understand, but the rules may be insufficiently prescriptive making provisions inadequate predictors of potential outlays. The purpose of this research is to redress this problem. We apply financial option theory to objectively mark-to-market the appropriateness of provisions replacing subjective inputs with market derived calculations.
Design/methodology/approach
This study applies financial option theory to determine whether provisions are appropriate according to market data. This research supports inferences regarding the probability of a provision being used while evidencing scope for earnings management.
Findings
In addition to showing how IAS 37 provisions may be calibrated against market data, from the large sample of UK-listed companies, the proposition that over-provisioning is common and related to share price volatility, is supported, supporting the view that IAS 37 rules may facilitate earnings management.
Practical implications
The financial and reporting community have struggled in interpreting the appropriateness of IAS 37 provisions. Are they too large or too small? What is the probability they will be used? Using option theory and market data, various subjective judgements may now be validated. This research should have tangible value to analysts, auditors, investors and other stakeholders concerned in the accurate valuation of potential liabilities.
Originality/value
Replacing subjective judgement and insufficiently prescriptive guidance, this study shows that financial option theory and share price data may be used to objectively calibrate the size of IAS 37 provisions.
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